Peace Arch Entertainment Group Inc.
TSX : PAE
AMEX : PAE

Peace Arch Entertainment Group Inc.

July 15, 2005 14:30 ET

Peace Arch Announces Proposed Private Placement of Up to US $2 Million

TORONTO, ONTARIO--(CCNMatthews - July 15, 2005) - Peace Arch Entertainment Group Inc. (TSX:PAE)(AMEX:PAE) today announced that it has entered into negotiations to issue on an arm's length private placement basis up to 4,347,827 Preference Share Units of the Company for US $2,000,000 at a subscription price of US $0.46 per Unit, each Unit consisting of one convertible preference share and one preferred share purchase warrant. The Units will separate at Closing. Each preference share will carry a 10% cumulative annual dividend and will be convertible at any time into one common share of the Company on a one for one basis, subject to customary adjustments, for no additional consideration. Each warrant will be exercisable into one preference share of the Company at an exercise price of US$0.50 per share for a period of 48 months from Closing, which preference share will carry a 10% cumulative annual dividend and will be convertible at any time into one common share of the Company on a one for one basis, subject to customary adjustments, for no additional consideration.

As the transaction on a non-diluted basis under TSX rules represents the issuance of approximately 41.5% which is more than 25% of the outstanding shares of the Company on a non-diluted basis, the Company is required to obtain shareholder approval of the transaction, which the Company intends to seek in writing from holders of more than 50% of the outstanding shares. The Company will be relying on exemption 604(d) of the TSX Company Manual in lieu of calling a special meeting which permits security holder approval to be obtained in writing, provided that written evidence that holders of more than 50% of the voting securities of the Company are familiar with the terms of the proposed transaction and are in favour of it, as well as issuing a press release a minimum of ten (10) business days before the close of transaction.

The Company has agreed to call a Special Meeting of Shareholders to amend the Company's articles to provide voting rights to the holders of the Company's preference shares. In the interim, Mr. Gary Howsam, CEO of the Company, has agreed to enter into a voting trust agreement with the placees whereby the placees will have the right to vote up to 4,347,827 common shares beneficially owned by Mr. Howsam until articles of amendment are filed attaching voting rights to the preference shares. The voting trust agreement will take affect the date of closing of the private placement.

Closing of the transaction remains subject to regulatory approval as well as the settlement of Closing Documents. It is anticipated that Closing will occur on or about July 29, 2005.

The net proceeds of the Offering will be used by the Company to fund working capital requirements and for general corporate purposes.

Peace Arch Entertainment Group Inc. (www.peacearch.com), one of Canada's foremost entertainment companies, creates, develops, produces and distributes proprietary feature film and television programming for worldwide markets. Peace Arch Entertainment Group Inc. and its subsidiaries have offices in Toronto, Vancouver, Los Angeles and London, England.

This press release includes statements that may constitute forward-looking statements, usually containing the words "believe", "estimate", "project", "expect", or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors, dependence upon third-party vendors, availability of capital and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

Contact Information

  • Peace Arch Entertainment Group Inc.
    Nicole Spracklin
    (416) 487-0377 (ext. 237)
    nspracklin@peacearch.com
    or
    Jaffoni & Collins Incorporated
    Robert Rinderman or Karin Oloffson
    (212) 835-8500
    PAE@jcir.com